from Funds Hub:

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Speakers at the Reuters Hedge Fund and Private Equity summit this week were asked "what keeps you awake at night" and the answers were wide-ranging, from "my 7-week old daughter" to "the next meteorite".

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Now comes the waiting, which, as Tom Petty can tell you, is the hardest part.

Now that General Motors Corp and Chrysler LLC have filed their plans of reorganization to the U.S. government and have started what looks like a long and not-painless process to make themselves smaller, more profitable and better suited to the current U.S. demand for new cars.

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Enough with the view that the current credit crisis will drag the U.S. into a “lost decade” similar to the one that Japan suffered in the 1990s, says Gary Talarico, managing director of Sun Capital Partners.

Talarico lived in Japan for 12 years and worked with Ripplewood Holdings as an adviser on the hugely profitable Shinsei Bank rescue deal. He says the U.S. is much more willing to take the pain of the crisis and emerge much stronger because of it.

Japan’s strategy to cope with their crisis leaned more to the left, Talarico told the Reuters Restructuring Summit in New York. And because of that, the Japanese economy stagnated for years.

As for what is happening in the U.S. right now?

“Creative destruction is a good way to describe it,” Talarico said in reference to the failure of Lehman Brothers, the buyout of Merrill Lynch and the government takeover of AIG.

“These things have to happen. I’m very sad about Lehman. I worked there for 15 years and I absolutely loved the firm. It’s a possibility that if the government moved faster, they might still be alive today. A lot of things might be different. Unfortunately, it is very hard to see the future.

But things have to fail, he said.

“There is no doubt that reckless things were done. Reckless people have to take their pain. But what we can’t afford is a systemic meltdown. It has global implications as well. So, unfortunately, tax payers have to carry some of that burden.”

To hear Talarico’s view on why the U.S. is not headed for a Japan-style slowdown, click here

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Martin Fridson — known as the “Dean of the high yield bond market” — is concerned about what we don’t know when it comes to consequences of the U.S. federal government’s $700 billion bailout to help move toxic mortgage debt off their balance sheet.

Fridson, the Chief Executive of Fridson Investment Advisors, told the Reuters Summit on Tuesday that beyond the unforeseen consequences that scare him most, moral hazard and inflationary pressures from the historic government action top his list of concerns.
To listen to Fridson’s comments, click here